Q. Do I have to pay Zakat on land and properties I own in my ancestral ‘home’?
A. Many Muslims who live in the West (like the UK) own lands and properties in their ancestral ‘home’. Some of these are productive assets and some use them for personal benefit of their close and distant family members. Many Muslims are unaware that land and properties they officially own in their ancestral lands may be subject to Zakat even though they are not directly benefiting from them every day. There are a number of issues related to this discussion such as agriculture, Zakat on animals, produce, land and property. For the purpose of brevity only the Zakat on land and properties will be discussed in this short answer.
Zakat on land and property: there are generally three scenarios:
1. If the land/property was purchased with the sole and explicit commercial intention, i,e to sale for profit then zakat is payable on the market value of the plot/property at the zakat due date.
Example: a plot of land/property was purchased for £10k, now at the Zakat due date this is valued at £20k at market rate. Zakat is due on the £20k.
2. If the land (property) was purchased for personal use to build a house etc then there is no Zakat on it.
3. If there is no clear intention of what the land (or property) is for at the time of purchase then there is no Zakat on it. However, if the land/property is sold later on then the money from the sale should be added in the Zakat calculation.
• When it comes to property. If the property is purchased for long term investment then zakat is not due on entire asset value but on the rental income acquired from it.
• If vegetation, crops and produce are grown on the land and they are for agricultural purposes (to sell), Zakat would be due on them. However, if they are for personal use there is no Zakat on them.
The following rules apply if the fruits, produce and crops are grown for agricultural purposes:
1. If the land is irrigated naturally then one-tenth of the produce is due in Zakat
2. If the land is irrigated manually then one-twentieth of the produce is due
3. If both then that which is more is considered
Zakat should be paid on the market value of the amount and paid in cash.
Sheikh A. Hasan (Zakat Specialist)